The Saracen Mineral Holdings Limited (ASX: SAR) share price gained 50% over the past 12 months. That gives the company a market cap of more than $6 billion at today’s price of $5.64 per share.
Saracen’s share price has gained twice as much as the price of gold since this time last year, which saw gold go from US$1,495 per ounce to US$1,877 per ounce today. A gain of 25%. Of course, that’s still well down from the 6 August peak, when the yellow metal was trading for US$2,063 per ounce.
Saracen shares hit their own peak on 27 July, at $6.48 per share, an all-time high. Since then the share price has dropped 14%.
Despite the recent slide, Saracen’s strong performance helped billionaire Kerry Stokes add $570 million to his wealth.
What does Saracen do?
Saracen Mineral Holdings is an Australian gold producer. All 3 of its mines – Carosue Dam, Thunderbox and the Super Pit (50% ownership) – are located within 300 kilometres of Kalgoorlie, Western Australia. The company forecasts it gold production will increase from some 500,000 ounces in this financial year to more than 600,000 ounces in the coming financial year.
Saracen is part of the S&P/ASX 200 Index (INDEXASX: XJO).
How did Saracen’s share price help stoke Kerry Stokes’ billions?
According to the Australian Financial Review‘s Rich List, Stokes wealth grew 10.2% year-on-year, reaching $6.3 billion.
Now if you’re like me, when you think of Kerry Stokes gold mining won’t be the first thing that comes to your mind. Stokes is far more widely associated with the media. Namely Seven West Media Ltd (ASX: SWM), which has a large presence in broadcast television, print and online publishing.
But it certainly wasn’t the Seven West Media share price that saw Stokes’ wealth balloon. Seven West’s share price is down 58% over the past 12 months.
Rather, as the AFR‘s Rich List revealed, Stokes made hay from his Saracen shareholdings. Remarkably, his holdings in the Aussie gold miner were worth more than the entirety of Seven West Media.
It remains to be seen how ASX gold shares will perform over the next 12 months. While many factors continue to support gold prices, the World Gold Council reported that the world’s central banks became net gold sellers for the first time in 10 years in the third quarter of 2020.
Though Saracen’s fortunes also ride on the productivity of its mining assets, the price of gold will be a big factor in determining Saracen’s future share price moves.
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Returns as of 6th October 2020
More reading
- Why market crashes are useful for buying ASX dividend shares
- 5 things to watch on the ASX 200 on Thursday
- How did ASX gold shares perform in the last quarter?
- 5 things to watch on the ASX 200 on Wednesday
- Why Saracen (ASX:SAR) is on track to achieve FY21 guidance
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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